Jun 2 / Lívea Coda

What if Center-South has less cane? Let's test it!

  Back to main blog page

"We remain cautious, awaiting May yield data before revising cane volume estimates, currently at 620 Mt. A potential reduction to 605 Mt would tighten the trade surplus and support a more bullish outlook, though a major price rally would likely require a much steeper drop in cane availability."

What if Center-South has less cane? Let's test it!

  • Raw sugar prices rebounded slightly after Unica’s mid-May report, which showed strong crushing volumes but left uncertainty about crop health.

  • The cumulative crushing gap from 25/26 versus last season widened to nearly 20 Mt, largely due to April/25 delays and leftover cane boosting early 24/25 figures.

  • TRS remained 5% below last year, but a record-high sugar mix (51.2%) helped ease concerns about cane quality, with prices failing to sustain their gains.

  • A potential 15 Mt reduction in our estimates of cane volume could cut sugar output by 1 Mt, tightening the trade surplus and supporting a more bullish price outlook, but not comparable to levels seen in years of deficit.

  • A major price rally would require a much steeper drop in cane availability.

Raw sugar prices regained some ground by the end of last week following Unica’s first half of May results release. The report was somewhat ambiguous, sparking debate about whether it provided enough insight into the crop’s overall health to justify further revisions.

Crushing reached 42.3 Mt, exceeding the 5-year average of 41.5 Mt, but still behind the 24/25 season. The cumulative gap widened to nearly 20 Mt, with 76.7 Mt crushed so far compared to 96.2 Mt during the same period last year. However, two key factors should not be overlooked. First, most of this shortfall stems from the second half of April, which experienced the highest number of estimated lost days for that period. Second, the early part of the 24/25 season benefited from an unusually high volume of leftover cane from 23/24.

Total Recoverable Sugar (TRS) supported a bullish tone, remaining approximately 5% below last year’s levels. On the other hand, the sugar mix gave bears some relief, hitting a record-high (over 51%) for the fortnight and easing concerns about cane quality in terms of sugar content (reducing sugars).

As a result, the market’s reaction was mixed. While April’s yield figures remain the most concerning, the report itself offered little new information on that front. Before making any significant adjustments to cane volume estimates, the market will likely wait for additional data.


Image 1: Raw Sugar's Historical Future Curve Comparison (USc/lb)

Source: LSEG, Hedgepoint

While we await May’s yield figures, our current estimate remains on the optimistic side at 620 Mt of cane for the Brazilian Center-South, supported by the excellent Vegetation Health Index. However, we do not rule out the possibility of a downward revision, especially if yields underperform despite the positive health indicators, or if weather conditions deteriorate.

Image 2: CS Estimated Vegetation Health Index

Source: NOAA, Hedgepoint

Looking ahead to the 25/26 crop, the southwest monsoon is progressing well, albeit slightly ahead of its usual schedule. The Indian Last week brought some bullish sentiment due to frost risks, but no significant impact was reported, and prices showed limited reaction. Still, this remains a factor to monitor closely.

In preparation, it’s essential to consider how trade flows might shift if Center-South results fall short of our current projections.
Following the latest Unica report, we made slight adjustments to our figures. Our ATR estimate was revised down to 140.5 kg/t, while the sugar mix was adjusted upward to 51.2%. Overall sugar production remains steady at around 42.5 Mt. With this output, Center-South could export 33.6 Mt while maintaining stable stock levels.

Assuming all other factors remain constant, this would result in a 3.7 Mt surplus in trade flows from Q2-2025 through Q3-2026. Such a scenario leaves limited room for price appreciation, particularly for raw sugar, as Brazil is its biggest supplier.

Image 3: Total Trade Flows – Base Case With 620Mt of cane

Source: Green Pool, Hedgepoint


But what if Center-South has less cane? In this exercise, we considered a 15 Mt reduction in cane volume, bringing the total to 605 Mt. Assuming no changes to the sugar mix or ATR, this would result in approximately 1 Mt less sugar production, directly impacting export capacity. Consequently, the cumulative trade surplus would also shrink by nearly 1 Mt.

This adjustment would support a more bullish narrative for the sugar market, potentially lending strength to the March 2026 contract, even if the surplus projected for late 2025 is smoothen out. Still, it would remain far from the deficit conditions observed in recent years. For sugar prices to return to the highs seen in 2022–2023, a more significant deterioration in cane availability would likely be required. All else equal, Brazil would need to lose up to 45 Mt from the current estimate to trigger a major bullish trend.

Current market discussions around a crop closer to 600 Mt would still imply a surplus, which could limit any strong bullish momentum. However, if demand holds up, prices could still rise above 20c/lb.

Therefore, while we wait for the release of further data, maintaining a cautious stance is essential for effective risk management. Gaining a clearer understanding of developments in the Northern Hemisphere will also be key moving forward. You can access some of the latest updates on the region through the link.

Image 4: Total Trade Flows – Stressed Scenario With 605Mt of cane

Source: Green Pool, Hedgepoint

In Summary

Raw sugar prices rebounded slightly late last week after the release of Unica’s first-half May report, which, despite showing above-average crushing at 42.3 Mt, highlighted a growing gap versus last season and left the market uncertain about the crop’s health. While TRS remained below last year’s levels, a record-high sugar mix offered some reassurance. We remain cautious, awaiting May yield data before revising cane volume estimates, currently at 620 Mt. A potential reduction to 605 Mt would tighten the trade surplus and support a more bullish outlook, though a major price rally would likely require a much steeper drop in cane availability.

Weekly Report — Sugar

Written by Lívea Coda
livea.coda@hedgepointglobal.com
Reviewed by Laleska Moda
laleska.moda@hedgepointglobal.com
www.hedgepointglobal.com

Disclaimer

This document has been prepared by Hedgepoint Schweiz AG and its affiliates (“Hedgepoint”) solely for informational and instructional purposes, without intending to create obligations or commitments to third parties. It is not intended to promote or solicit an offer for the sale or purchase of any securities, commodities interests, or investment products. Hedgepoint and its associates expressly disclaim any liability for the use of the information contained herein that directly or indirectly results in any kind of damages. Information is obtained from sources which we believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. The trading of commodities interests, such as futures, options, and swaps, involves substantial risk of loss and may not be suitable for all investors. You should carefully consider wither such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results. Customers should rely on their own independent judgment and/or consult advisors before entering into any transactions. Hedgepoint does not provide legal, tax or accounting advice and you are responsible for seeking any such advice separately.  Hedgepoint Schweiz AG is organized, incorporated, and existing under the laws of Switzerland, is filiated to ARIF, the Association Romande des Intermédiaires Financiers, which is a FINMA-authorized Self-Regulatory Organization. Hedgepoint Commodities LLC is organized, incorporated, and existing under the laws of the USA, and is authorized and regulated by the Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association (NFA) to act as an Introducing Broker and Commodity Trading Advisor. HedgePoint Global Markets Limited is Regulated by the Dubai Financial Services Authority. The content is directed at Professional Clients and not Retail Clients. Hedgepoint Global Markets PTE. Ltd is organized, incorporated, and existing under the laws of Singapore, exempted from obtaining a financial services license as per the Second Schedule of the Securities and Futures (Licensing and Conduct of Business) Act, by the Monetary Authority of Singapore (MAS). Hedgepoint Global Markets DTVM Ltda. is authorized and regulated in Brazil by the Central Bank of Brazil (BCB) and the Brazilian Securities Commission (CVM). Hedgepoint Serviços Ltda. is organized, incorporated, and existing under the laws of Brazil. Hedgepoint Global Markets S.A. is organized, incorporated, and existing under the laws of Uruguay. In case of questions not resolved by the first instance of customer contact (client.services@Hedgepointglobal.com), please contact internal ombudsman channel (ombudsman@hedgepointglobal.com – global or ouvidoria@hedgepointglobal.com – Brazil only) or call 0800-8788408 (Brazil only).  Integrity, ethics, and transparency are values that guide our culture. To further strengthen our practices, Hedgepoint has a whistleblower channel for employees and third-parties by e-mail ethicline@hedgepointglobal.com or forms Ethic Line – Hedgepoint Global Markets. “HedgePoint” and the “HedgePoint” logo are marks for the exclusive use of HedgePoint and/or its affiliates. Use or reproduction is prohibited, unless expressly authorized by HedgePoint. Furthermore, the use of any other marks in this document has been authorized for identification purposes only. It does not, therefore, imply any rights of HedgePoint in these marks or imply endorsement, association or seal by the owners of these marks with HedgePoint or its affiliates.

To access this report, you need to be a subscriber.